Global implosion of trust

Public trust in the institutions of government, business, the media and nongovernmental organizations is in freefall, according to a survey in the 2017 Edelman Trust Barometer.

In two-thirds of the 28 countries surveyed, more than half of the public no longer trusts mainstream institutions to do what is right. Trust in the media, especially, has fallen dramatically and is at an all-time low in 17 countries, the survey found.

Trust in government fell in 14 countries, making it the least trusted institution in half of the countries.

The credibility of leaders has also taken a hit. CEO credibility plummeted in every country and is at an all-time low. Government officials remain the most distrusted overall.

Most significantly, more than half of those surveyed worldwide believe that the current system has failed them, is unfair and offers little hope for the future. Only 15 percent are confident it is working.

Even half of the top earners and the college educated have lost faith in the economic and political system and agree that it has failed.

Three major European countries – France, Italy and Spain – are in the top five countries where the public has the least faith in the current system, together with Mexico and South Africa.

“The implications of the global trust crisis are deep and wide-ranging,” said Richard Edelman, CEO of public relations firm Edelman. “It began with the Great Recession of 2008, but like the second and third waves of a tsunami, globalization and technological change have further weakened people’s trust in global institutions. The consequence is virulent populism and nationalism as the mass population has taken control away from the elites.”

Shrinking middle class

One indication of the perceived “system failure” in the United States is the shrinking of the middle class during the past four decades.

A 2015 Pew Research Center study noted that for the first time, more Americans are in the upper and lower income brackets than in the middle class. The share of the American adult population that lives in middle income households has fallen as middle income earners moved to both upper and lower income tiers.

The share of Americans who are classed as upper income increased more than the share of lower income Americans. But in almost half the metropolitan areas examined by the study, “There has been more movement down the ladder than up.”

This shift is partly explained by a decline in the median household income in the U.S. from $67,673 in 1999 to $62,462 in 2014, after the data is adjusted for household size and scaled to a household of three.

Likewise during that period, the amount required to be classified as middle income or upper income households also fell, from $45,115 to $41,641 and $135,346 to $124,924, respectively. At the same time, the upper income tier benefited from rapid income gains.

In addition to a 4 percent income decline for middle income Americans, their median wealth assets fell by 28 percent between 2001 and 2013.

Weaknesses in Europe

In Europe, meanwhile, the financial and government debt crisis combined with structural weaknesses have caused rising unemployment and slow economic growth, which in turn put a greater strain on the public purse. EU political leaders have been unable to agree to compromises on debt relief, structural reforms, monetary policy or the level of government spending.

Not surprisingly, the belief in political and economic leadership has waned. More than two-thirds of the general population worldwide have no confidence that current leaders can address their country’s challenges.

The liberalization of financial markets and the globalization of trade and supply chains has produced winners and losers. While this may have still benefited economies as a whole, the anticipated losers have not been sufficiently compensated to avoid a palpable rise in inequality.

In many countries, the advocated solution is now not greater wealth redistribution to redress the imbalance but more nationalism and protectionism.

“Business has much to fear in this context,” said Edelman.

Almost half of the general population now believes that free trade agreements hurt a country’s workers and nearly three quarter favor government protection of jobs and local industries even if that leads to slower growth for the economy in general.

“Populist-fueled government could implement harsh regulation of specific industries such as manufacturing and technology, and a ban on immigration, even of skilled workers,” Edelman wrote in his analysis.

Media

The level of distrust is intensified by media and social media echo chambers which reinforce personal beliefs and block opposing points of view, the survey noted.

This confirmation bias is strengthened as most people favor search engines (59 percent) over human editors (41 percent) and are nearly four times more likely to ignore information that supports a position they do not believe in.

At the same time, the gap between the informed public ‒ defined as college educated, top earning, regular consumers of news media ‒ and the general population in terms of trust has widened considerably with the biggest disparities in the U.S., the U.K. and France.

“People now view media as part of the elite,” said Edelman. “The result is a proclivity for self-referential media and reliance on peers. The lack of trust in media has also given rise to the fake news phenomenon and politicians speaking directly to the masses.”

Trust in traditional media fell 5 points to 57 percent, the steepest decline among media platforms since 2012, followed by social media (41 percent), which dropped three points. By contrast, online-only media (51 percent) received the biggest bump in trust up five percentage points.

For Edelman the solution is that “media outlets must take a more local and social approach.”

Businesses could make a difference

Although trust in business has dropped in 18 countries to 52 percent overall, the Trust Barometer noted that business is viewed as the only mainstream institution that could make a difference.

About 75 percent of respondents think that a company has the ability to grow profits and improve economic and social conditions in the community where it operates. Especially the respondents who are uncertain whether the current system is working for them trust businesses most.

Still, globally a majority of respondents are concerned that they might lose their job because of the impact of globalization (60 percent), lack of training (60 percent), immigrants who work for less (58 percent), outsourcing of jobs to cheaper countries (55 percent) and automation (54 percent).

“Business is the last retaining wall for trust,” said Kathryn Beiser, global chair of Edelman’s Corporate practice. “Its leaders must step up on the issues that matter for society. It has done a masterful job of illustrating the benefits of innovation but has done little to discuss the impact those advances will have on people’s jobs. Business must also focus on paying employees fairly, while providing better benefits and job training.”

If more than half of the population believes the current system is not working, Beiser said, businesses should assume that their employees are a subset of that population.

“In a climate of disillusionment, remaining connected to the mood and concerns of the workforce becomes increasingly important.”

Businesses are also at odds with a public that is keen to see more rather than less regulation on business, because it believes the pace of change in business and industry is happening too fast.

A push for further deregulation could in fact lead to a greater erosion of trust.

“It would be the greatest folly for CEOs to press populist leaders for less regulation, particularly in the environmental arena,” Edelman said. “Fifty-two percent of the general population say a company’s effort to protect and improve the environment is important for building their trust.”